Consumers’ perception of the Internet as a product information tool

An Exploratory Study on Online Searching
Behaviour and Source Evaluation.

Submitted for the award
of the MA in Marketing Communications
in the Academic Year 2004-05

by
Judith Hoffmann

Abstract

Over the last ten years, the Internet has received growing importance all over the world. With the increasing user numbers, also companies have developed an interest in presenting themselves online and using the new medium as a tool for Marketing and PR. However, the open structure of the Internet has also enabled customers to publish their opinions on companies and product. Without being dependent on traditional media, these third-party texts are now available easily to the public. Online formats, which allow individuals to express their opinions either alone or within a group form now a considerable amount of the product- or company-related information available. This has led to the fear of companies of losing reputation and customers because of this uncontrolled information. However, very little investigation has gone into the usage of these sources by consumers when searching for product information online and therefore tried to justify this fear.

This lack of research is addressed by the present study. It explores search strategies of consumers and their decisions for certain online sources. Especially the decision for either corporate or non-corporate sources has been in the focus. The research builds on variables, which have been considered by other researcher as influential for internet behaviour. The conceptual framework outlines this background and discusses research, which has been conducted in related areas.

In the centre of attention is the European perspective. However, because of time and financial constraints primary research has been limited to two countries. Six focus group interviews have been conducted in Germany and Italy, followed by 40 qualitative e-mail interviews in both countries. The findings of the research led to the conclusion that the internet is not used in such an active way as it could and as many researchers suggested. Consumers mostly feel limited by time or interest. Especially the high amount of information available online has been found deterrent. Furthermore, it turned out that users are sceptical towards individual information and therefore prefer official sources or sources where a high number of opinions are provided. However, it has been concluded that the corporate web site is no longer the only source for consumers and that companies are forced to an honest communication strategy since people are aware of other information sources.

Contents Page

Acknowledgements ... i
Abstract ... ii
Contents ... iii
List of Figures ... vi
List of Tables ... vii

1. Background
1.1 Professional Situation – Why this study is needed
1.2 A Gap in the Research
1.3 The Decision for Italy and Germany as Research Population
1.4 Research Aim
1.5 Leading Questions

2. Conceptual Framework
2.1 Consumer Online Behaviour – How do they find information?
2.1.1 Internet Activities and Demographics
2.1.1 Consumer Choice of the Internet as Information Source
2.1.3 Online Information Searching Behaviour
2.1.4 Use of third-party online product information
2.1.5 Information Overload
2.2 Online Credibility
2.3 Importance of the Corporate Web Site
2.4 The Focus of the Project

3. Methodology
3.1 Background for Research
3.2 The Research Process
3.3 The Research Philosophy and Rationale
3.4 The Nature of the Study
3.5 Qualitative Research Methods
3.5.1 Focus Group Interviews
3.5.2 Electronic Interviews
3.6 Population
3.7 Target Sample
3.8 Data Analysis Process
3.9 Limitations
3.10 Problems ocurred during the Research
3.11 Validity
3.12 Reliability

4. Findings
4.1 To find out what importance the Internet has for consumers in the context of product information search.
4.1.1 Internet Experience is generally high
4.1.2 Dependence on the Internet as an Information Source
4.1.3 User show Trust into the Internet but doubt at the same time
4.1.4 Layout and Source indicate Credibility
4.1.5 Official Sources are important – Single Opinions are not credible
4.1.6 Majority Opinion counts
4.2 To identify Search Patterns consumers use when they intend to find ´product or Company Information on the Internet.
4.2.1 “Google” is the new gatekeeper
4.2.2 Only the first pages count
4.2.3 WOM as source for Internet Addresses
4.3.4 Corporate Pages Use depends on Education and Experience
4.2.5 Negative Information Search only in Crisis Time
4.2.6 “Favourites” are more important for experienced Users
4.3 To discover what factors influence consumer decision for certain online sources
4.3.1 Scepticism towards corporate information
4.3.2 Corporate Web Sites for technical facts
4.3.3 Contradiction: Corporate web sites are seen as visiting card, but information is not valued
4.3.4 Experiences of Fellow Customers work as Incentive
4.3.5 Price and Functionality of Products are influential Factors
4.3.6 No Internet for Services based n Trust
4.3.7 Communication counts
4.3.8 No contribution to unofficial Pages
4.3.9 Consumers are realistic about companies and third parties
4.4 Chapter Conclusion

5. Recommendations
5.1 Further Research
5.2 Marketing Communications

References
Appenices
Appendix I Definition of Online Formats ... I
Appendiy II Interview Guide – Focus Group ... II
Appendix III Focus Group Interviews ... III
Appendix IV Respondents’ Profiles ... IV
Appendix V Transcript of one Focus Group Interview ... VII
Appendix VI Focus Group Exercise ... XVII
Appendix VII Introduction letter for the questionaires ... XIX
Appendix VIII Example of a questionnaire ... XXI
Appendix IX Questions and Objectives Relation ... XXIX
Appendix X Questions Rationale ... XXX
Appendix XI Example of coding ... XXXIII
Appendix XII Extract of Coding Scheme ... XXXVII
Appendix XIII Some Extracts from Interviews ... XXXVIII

Chapter One - Background

1.1 Professional Situation – Why this study is needed
The Internet plays an important role in today’s daily life and business. An often-quoted Internet fact is that it took the radio 38 years to reach an audience of 50 millions, television needed 13 years, and the Internet just two-and-a half years (Bunting, Lipski, 2000). What started as a military project (Ayres and Williams, 2003) and was later an information and communication network for academics (Mowery and Simcoe, 2001) has now become an every-day medium for a growing number of people. The development of easy-to-navigate web browsers has been one important step, which enabled the Internet to become a steadily growing information source (Kaye and Medoff, 2001, Shackleford, Hölscher and Strube, 2000, Thompson and James, 1999).

Prior to the Internet, marketers generally were able to provide or influence much of the information about their product for the media (Ward and Ostrom, 2003). On the other hand, the possibilities of consumers to get information about products or companies were restricted (e.g. advertising, brochures, visits in shops or reviews in consumer magazines). This was mainly caused by an unbalanced power distribution. Due to the gatekeeper function of journalists, the voice of industry had more chance to be heard and get media coverage (McLeod, 2000). This led to corporate communication as a merely one-way activity (De Bussy, Watson, Pitt and Ewing, 2000).

The Internet has changed this situation as it enabled word-of-mouth like information in the mass media environment (Ward, Ostrom, 2003, Dellarocas, 2003). The often-cited
Internet benefits of being one-to-one platform as well as one-to-many communication at extremely low costs and independent from time or location (Pitt, Berthon, Watson and Zinkhan, 2002) has helped to empower customers. Today when a customer turns to the Internet and seeks product information, the range of information and potential sources is much wider than those of traditional media (Ward, Ostrom, 2003). Not only can official product-relevant information be found, but also millions of written information pieces by private people or activist organisations. This can even mean that employees or former customers talk about their experiences. Therefore, the Internet increases transparency of a company’s operations and leaves it more exposed to possible criticism (Anonymous, 2002). The PR people as former gatekeepers of corporate information are now bypassed (Philipps, 2000). People are communicating not only with the company if they have problems, they are communicating with each other.

Recent PR books (Haig, 2000, Philipps, 2001, Middleberg, 2000) and journal articles (e.g. Kahn and Keller, 2004, Blood, 2000) work already as a modern Cassandra, exhorting companies to be aware of the potential danger of the Internet. At the same time they tell Internet activism stories where a company is forced to change its behaviour because of online protest as happened to Shell (Brent Spar), Nestlé (a breast milk substitute), or Dunkin’ Donuts (anti-Dunkin’ Donuts site) and many others (Bunting and Lipski, 2000). Traditional media pick up this “shift of power” (e.g. Guernsey, L., 2000). This leads to the conclusion that the way companies organise their PR work has been changed dramatically by the Internet (e.g. Coombs, 2002, Hurme, 2001, Cooley, 1999, Heath, 1998). “The absolute minimum a company can do is to monitor the Internet” (Regester and Larkin, 2002, p.148) is the usual advice of recent PR strategy books, informing companies about the potential threats on the Internet and methods to react to and prevent an “online crisis” (e.g. Middleberg, 2000, Holtz, 2002, Haig, 2000).

1.2 A Gap in the Research
According to this apparently dramatic situation in the area of marketing and PR, one should expect a large number of studies dealing with these problems. Indeed, there are several academic papers dealing with the new medium. Nevertheless, the bulk of research appears to be rather outdated considering such a fast growing medium. Not only because user numbers have grown fast from the late 1990s, when the majority of research was conducted to 2005 by 146.2% (Internetworldstats, 2005), but especially when talking about Internet implications on business and marketing. The conditions for online business have changed during recent years as the average user became increasingly the average American, while the pre-dot-com crisis user tend to be part of the early-adopter group (Johnson and Kaye, 2003). Regarding Marketing Communications and the Internet, this has led to an unbalanced research situation. Since the new medium is entering the “post-euphoric phase” (Anonymous, 2004), several studies were conducted on PR practitioner’s and corporate use of the Internet as a PR and communication tool (e.g. Hurme, 2001, Newland Hill and White, 2000, Ihator, 2001, Ryan, 2003, Porter and Sallot, 2005) and about the implications of the Internet for activists and NGOs (Taylor, Kent, White, 2001, Naudé, Froneman, Atwood, 2004).

On the other hand, there are a number of studies dealing with user attitudes towards certain web site types (e.g. Bailey, 2004, Bickart and Schindler, 2001, Walker, 2001, Chatterjee, 2001) and Internet searching behaviour (e.g. Bhatnagar and Ghose, 2004, Ratchford, Talukdar and Lee, 2001), which form a basis of this study and will be discussed in the literature review. However, none of those studies has yet analysed “ordinary” consumer’s perception of the Internet as a product information tool and linked this to the consumer’s consideration of non-corporate information. In fact, research on how consumers search in the online environment and proceed to evaluate unofficial or negative information, is suggested as a pressing need (Ward and Ostrom, 2003). This is where this study intends to address a gap in the research. However, since both areas are extensive fields of research, this study shall focus on search strategies and the evaluation of unofficial sources as worth to consider or not. It is not intended to research how consumers actually react to unofficial sources regarding their shopping behaviour or their attitudes towards a company.

After analysing the potential threat and its importance, a number of interviews with consumers about their online searching behaviour provide data that reveals the extent to which non-corporate sources are considered by customers and suggest strategies for marketers and PR professionals on how to deal with this problem.

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